86.6 F
San Fernando
Wednesday, Oct 4, 2023

RETAIL—Fast-Growing Tarzana Firm Digs Up Retailing Gold

In today’s highly saturated retail market, a lot of shopping centers are in big trouble. Many are outdated. Others aren’t pedestrian friendly. Still others don’t provide the right type or mix of stores. Old-style theaters, meanwhile, falling prey to the craze for stadium seating and digital sound, are closing, and retail centers are left with reduced foot traffic and gaudy “Space Available” signs. What’s a shopping center owner to do? The answer may lie with NewMark Merrill Cos. The Tarzana development firm specializes in repositioning shopping centers. The company buys or takes over management of outdated retail centers, does the necessary facelift, brings in name-brand retailers and breathes new life into aging projects. All the problems facing the retail industry have meant boom times for NewMark. Its revenues grew from $1.2 million in 1997 to $5.8 million in 1999. And with malls and other shopping centers scrambling to reinvent themselves, the future for companies like NewMark looks bright, said Jack Kyser, chief economist for the Los Angeles Economic Development Corp. Indeed, about $459 million will be pumped into building and renovating retail centers in L.A. this year alone, up from $408 million in 1999, according to the LAEDC. “With what’s going on in retail and all the repositioning going on, you can sort of forecast bonanza years for (NewMark) moving forward,” said Kyser. The company was founded in 1997 when longtime friends Sandy Sigal and David Frank merged their respective development firms. Today the company has 30 employees and offices in Tarzana, Norwalk, Anaheim, Oceanside and Las Vegas. It owns or manages 4 million square feet of retail space all the way from San Diego to San Luis Obispo, as well as in Las Vegas and Phoenix. Of the 42 properties in its portfolio, the company built 10 from the ground up and acquired and repositioned about 20 more. The rest it manages for other owners. Diamonds in the rough Sigal, the company’s 36-year-old president, said a key to NewMark’s success is finding downtrodden retail centers in established areas and attracting national retailers such as Ralphs, 99 Cents Only Stores and Pic N Save to revitalize the outlets. “We understand what they (the retailers) are looking for, and we can provide a product that will work for them,” said Sigal. “There’s also a certain level of trust where we can say, ‘Here’s how your format could be a little different in a particular area that might make it a little more successful.'” The company also works hard to understand the surrounding community and give shoppers what they want. “What we’re finding is that the companies that are successful are the ones that adapt to each of their communities,” said Sigal. Also, by revitalizing shopping centers that have lost their spark, the company avoids the political and neighborhood opposition other developers face. “Political leaders we’re working with see a dilapidated mall in the middle of their city, and that’s the last thing they want,” said Sigal. “Instead of tearing down a beautiful, green mountain, I’m revamping something that’s already there.” When the company acquired a 378,000-square-foot retail center in Anaheim a year ago called the Anaheim Town Center, the strip mall was only 70-percent leased. NewMark revamped the mall and attracted 99 Cents Only and an Anna’s Linens. The company helped convince Kmart and Ralphs to spruce up their stores. As a result, the lease rate jumped to 90 percent and the operating income from the center increased by $500,000 a year. It’s no mistake that 99 Cents Only and Pic N Save are in the company’s stable of go-to retailers. Where shoppers might have been reluctant to step into a Pic N Save or another deep discounter in the past, customers today are looking for deals, said Sigal. “Now it’s perceived as smart to shop for value,” he said. Sophisticated Latino markets The company is also seeing a dramatic increase in the number of sophisticated and well-financed retailers from Mexico looking to sell everything from furniture to electronics to groceries to Latino consumers. “There’s a very large population of first-generation (Mexicans) who are more familiar with the retailers down south then they would be with a Circuit City,” said Sigal. Frank, the company’s 40-year-old CEO, said he and Sigal carefully seek out shopping centers that would be prime for repositioning. In cases in which the owners aren’t willing to sell, Sigal and Frank will offer assistance in repositioning and, in many cases, managing malls. The company then receives a percentage of the increased value of the project in return for its services. Jeff Gold, senior vice president of real estate for 99 Cents Only Stores, described Sigal and Frank as “basically dealmakers.” “Although it’s a good-sized company, they don’t have a lot of bureaucracy and they know how to get things done,” he said. 99 Cents Only has had to pass on several retail centers that were run down despite good demographics in the surrounding communities. When NewMark took over those same shopping centers, Gold said he could be confident the company would turn them around. “They’ve done a good job taking highly inferior properties and turning them into great, thriving locations,” he said.

Featured Articles

Related Articles